Travel to Bree and find the Smithy's wife standing in front of the Blacksmith Shop. She'll ask the character to find her husband in a cave near Weathertop.

Follow the stud trail to a cave entrance in a small outcropping that stands alone (not part of a mountain or cliff). Enter the cave and drop down to where the Smithy needs help clearing a path to make his exit.

Choose some dwarves and buddy up to smash through the gate.

Choose Ori or another character with a slingshot and shoot the target to clear the next barrier.

Find the dig spot and have Sam or someone else with a spade dig up a bouncy mushroom. Bounce on the mushroom to reach the top of the block. Push the lever to clear the final bit of rubble.

Exit the cave and then walk back to the Blacksmith's shop with the Smithy to receive a Mithril brick and see the shop open for business.